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Verizon Raises Its Dividend; New Yield Is 4.2%

By Eric Volkman – Sep 3, 2020 at 6:04PM

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The company didn't hesitate to mention that this is the 14th year in a row it's bumping the payout higher.

Verizon Communications (VZ -0.39%) isn't a Dividend Aristocrat, but it appears to be making a long-term play at eventually becoming one. On Thursday, the telecom giant said it's raising its quarterly payout for the 14th year in a row. S&P 500 index components that accomplish this feat for a minimum of 25 years in a row become Aristocrats.

Whether or not it's aspiring to stock royalty, Verizon added just over $0.01 per share to the distribution, for a total of nearly $0.63. The new dividend is to be handed out on Nov. 2 to investors of record as of Oct. 9. Based on the most recent closing stock price, that yield will be 4.1%.

A young woman using a smartphone.

Image source: Getty Images.

At the beginning of 2007, before that annual raise habit started to kick in, Verizon paid slightly more than $0.40 per share. The current level is more than 50% higher. Like its predecessor corporate entities, Verizon has been a very steady and reliable dividend payer, handing out a distribution in every quarter of its existence, even through challenging economic times.

With a wide and generally loyal base of customers paying at regular intervals, Verizon has very strong cash flow. In the company's most recently reported quarter, free cash flow topped $10 billion, far more than it required for the $2.5 billion or so it dispensed in shareholder dividends. It clearly has room for a raise, particularly a modest one like this latest bump.

Few investors hate dividend raises, so it's not surprising that Verizon stock rose (albeit slightly) on the news. They added 0.1% on Thursday, in sharp contrast to the decline of the major equity indexes.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.

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